EUROPE: Global Principles to Address Escalating Market Data Costs 

Monday June 29 2020

On 29^th June 2020,the International Council of Securities Associations (ICSA), the European Fund and Asset Management Association (EFAMA), and the Managed Funds Association (MFA) published a report to call for the implementation of internationally recognized principles to address excessively high market data fees and unfair licensing provisions.

Trading venues (exchanges and other multilateral trading systems) have a dominant position on market data generated by trading activity on their platforms and, due to regulatory requirements, there are no substitutes for their market data products. Under these uncompetitive conditions, many trading venues have dramatically increased prices for data which has had several negative implications for investors, capital markets, and the economy, says the report.

The report recommends that market data costs (i.e. market data pricing, licensing practices, definitions, audit procedures, and connectivity fees) be subject to full regulatory scrutiny to ensure that market data fees and licensing practices are fair, reasonable, and not a burden on competition. It establishes three core principles:

1. The price of market data and connectivity should be based on the costs of producing and distributing the data with a reasonable mark-up and measured against a recognized cost benchmark.
2. Trading venues should standardize key market data contract definitions, terms, and interpretations. Standardized agreements should be subject to regulatory review.
3. Market data licensing contracts should be simplified to ease the burden of administration on broker-dealers and avoid unnecessary audits

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